What Don't They Get?

As the economy tanks all around the US--and all around the world for that matter—I keep hearing people expressing surprise over how banks and corporations are apparently wasting bail-out money on what is essentially business as usual. I must admit that I don’t get this surprise. What it tells me is people expect corporations and those at the heady tops of CEO office food chains to behave like people. They aren’t and they don’t. In an earlier blog, I talked about how corporations are not governments. Well, they are not human beings either.

Someone applying human rationality to corporate life might expect that the second prime motivation for business decisions (the first one being to make a profit) might be staying in business. The sad fact is that this is a fallacy when a business is worth more to its CEOs if it is dissolved. No one is accountable if a business goes under and as for the CEOs, golden parachutes rob accountability and hefty bonuses undermine ethics. Sure, there are ethical businesses but these are often non-profit and smaller. Once a company goes public, picks up a board composed of other CEOs, and has large enough legal and financial departments to fend of challenges, all bets are off.

I saw this pattern work itself out in a public state university when I was working in the president’s office. Make no mistake about it—a big university will operate just like a corporation and may have a budget as large. The only difference will be the university’s self-righteous dedication to “new knowledge.” In this case, the board of CEOs was composed of governor-appointed regents, many of whom wanted to use the university in the promotion of their own business interests. The president/CEO was tasked to raise money for the university and to keep the faculty and students quiet. The students were actually on the bottom of the pile, trotted out to justify budget increases at the legislature, but otherwise ignored unless they massed on campus in protest. Instruction was always the first thing cut in a budget downturn—and there was always a budget shortage since the university perennially pleaded poverty when it came time to present the budget to the legislature. It was rather cynical as I look back on it. It strikes me just as unethcal as pleading for a handout from the feds and then spending it to send administrators on expensive retreats.

The one axiom I have learned in my cynical way is that if there is a way around a regulation, the brightest will find it and exploit it. If there is a promise of a bonus, somehow, magically, that threshold will be reached. If there are statistics that can be used to cook books, they will be. Consider what I used to tell my writing students: 100% of people born before 1900 ate tomatoes and are now dead. What might account for this? I always caught someone who thought that the tomatoes then might have been poisonous.

The only solution I can see is eternal vigilance and more oversight, not less. I certainly don’t trust my fellow citizens enough to want to repeal all the laws that require us to be civil to one another. Why should I trust my money to entities that build elaborate restrooms for CEOs who don’t get it and who couldn’t care less about me?